TITLE AD VALOREM TAX

• A one-time tax for vehicles purchased in Georgia on or after March 1.

• It replaces Georgia sales tax and the annual ad valorem tax.

• It is 6.5 percent of the vehicle's value and must be paid when the vehicle is titled.

• The tax applies to private sales, as well.

• Owners of vehicles bought before March 1 will continue to pay the annual ad valorem tax while they own the vehicle.

As Georgia switches today to a new ad valorem vehicle tax, many residents are left scratching their heads about what it all means.

"Lots of people are asking questions," Catoosa County Tax Commissioner Carolyn Walker said.

Walker said much of the confusion comes from the misconception that the new ad valorem tax will be required in addition to Georgia state sales tax.

But starting today, Georgia residents who purchase a vehicle will not have to pay that 7 percent sales tax. Instead, the new owner will pay a one-time title ad valorem tax, or 6.5 percent of the vehicle's value, when the car is titled.

And for these new vehicles, the title tax will replace the annual ad valorem tax.

"If they pay the 6.5 percent, there will no longer be an annual ad valorem tax, or birthday tax, on those cars that are bought under this new tax," Walker said.

Under the old ad valorem tax, a Georgia resident who owned several newer cars might have to pay hundreds of dollars annually when his birthday rolled around.

Vehicles purchased before March 1 still will be subject to the annual ad valorem tax. However, there is one exception, Walker said. Buyers who bought cars in Georgia between Jan. 1, 2012, and March 1 are able to opt out of the annual ad valorem tax if they can prove they paid sales tax to a Georgia dealer.

Damon Skates, sales manager at Jackson Chevrolet Buick GMC in LaFayette, Ga., said the new tax could end up costing car owners less.

"I think it'll save customers money over time, because they won't have that ad valorem tax every year," he said.

Unlike the old policy, which only applied to vehicles bought from dealers, this tax also will be applied to cars bought in private sales when they are titled.

Skates said this will have a big effect on private car sales.

"I think they may be more apt to trade than to try and sell it because they may feel they won't get as much [money] knowing that the people that buy it have to pay a tax on it," he said.

The rate will gradually increase to 7 percent in 2015 and could go up to 9 percent if state revenue needs are not met, but Walker says don't kill the messenger.

"It's a state law," she said. "We're just ... trying to help everybody."